Creator of Chart of Doom Defends Chart Badly and Casts Aspersions

Scott Winship
, ContributorI assess the state of opportunity in America and ways to expand it.Opinions expressed by Forbes Contributors are their own.

If you are going to accuse someone of cherry-picking data, you want to make sure your case is pretty solid. In particular, you don't want to criticize them for being anti-empirical when your underlying case is based on an elementary methodological error related to basic math. Like Pavlina Tcherneva has done.

Tcherneva is the creator of the much-heralded Chart of Doom showing that the share of income growth going to the top has (nearly) steadily risen since the mid-twentieth century. I argued that the chart conveyed that impression only because of several methodological shortcomings. I acknowledged that inequality has risen but showed that the rate at which it has risen hasn't steadily grown. That is a point that none of my critics has acknowledged as my point (even one who received an email response from me ahead of his response explaining that that was my point). It is a policy relevant point, which is why I spent the better part of three days crunching numbers and writing my original piece.

Tcherneva has now weighed in with her response to me. She starts off making the same mistake that others have--she says that my argument is "that income distribution [sic] has been improving since 1990." Actually I find that the rate at which the gains have been going disproportionately to the top has been slowing, which is to say the gains are still going disproportionately to the top and, as I stated at the beginning of my essay, the share of income going to the top is (probably) increasing. My argument was not about whether inequality is growing or not, it was about whether, as Tcherneva says in her latest post, "with virtually every postwar expansion, a greater and greater share of the average income growth has gone to the wealthy [sic] 10% of families."

But her most egregious error comes in her discussion of what one finds looking at business cycles instead of economic expansions. I had argued that by looking only at expansions, Tcherneva obscures the fact that when one group gets a disproportionate share of gains in an expansion, it can get a disproportionate share of losses in the subsequent recession. If all outsized gains are eroded by subsequent outsized losses, then over a business cycle, it's a wash. What we care about are business cycles. Tcherneva now doesn't seem to disagree that it is better to look at business cycles. Indeed, she thinks doing so reinforces her original chart because the way I looked at business cycles was wrong. But that's not all--she says I did it wrong to mislead the reader: "he's calculating his business cycles incorrectly (and I am forced to conclude, based on what you are about to read, deliberately so because, he doesn’t like the outcomes that derive from correct business cyclical calculations…I can’t think of any other possible motive)!"

Tcherneva is wrong on both counts--I did it right and my motive was to ensure that public policy isn't based on charts that fail to convey history correctly.

According to Tcherneva, I "double report" the years that mark the peak of business cycles. This is a technical argument, but that she is wrong and I am right is fairly easy to convey. Imagine that from 2014 to 2018 mean income for the bottom 90% is as follows: